January 22, 2010

The Signs of Profitable Markets

If you knew the likely profits in a market BEFORE you went to the time, effort and expense of creating an internet business in that market...

Could this knowledge save you a lot of wasted time, effort and money?

You bet it would!

You could work out, ahead of time, whether you should focus your efforts in that market - or whether you should focus on a more profitable market - before you clicked a button!

So what do you look for when determining the likely profits in a market?

There are two key factors you want to research:

1. Traffic Levels - How many potential customers (web-site visitors) are there in this market, and;

2. Visitor Values - What is each one of these potential customers worth?

Together, they will tell you the QUANTITY, as well as the QUALITY of potential customers in that market.

Here's what I mean...

Traffic Levels

Traffic Levels are simply the number of people who are searching online in a particular market. The more people who search for keywords related to that market, the bigger the market must be - and the bigger the market is, the more potential customers there are!

The problem with just using Traffic as an indication of the quality of a market is it only gives you part of the picture.

There are plenty of online markets that have high levels of traffic, but low levels of buyers - like the "jokes", "games" and "quotes" markets.

People browsing within these markets generally aren't "hungry" to buy.

In most cases, these people are looking for web-sites with free content!

They don't want to spend money.

So while you may receive a lot of visitors to your web-site, it's unlikely that any more than a tiny portion of these people will buy from you.

That's why it's not enough to just look at the traffic levels in a market.

We need to find markets full of people who have money, and are willing to spend it.

We want markets that are full of BUYERS - not just browsers.

That brings us to the second key factor we should look for in markets...

Visitor Values
It makes sense targeting markets where we can find the big spenders.

Big spenders make big purchases - and for us that means big profits!

But - wait a minute...

There are plenty of markets that spend big, but have only a tiny number of customers.

Let's take the example to the extreme, and consider some really big-spending markets, like people searching for "platinum jewellery", "Aston Martin DB9 Car Dealer", "buy luxury super yacht" or "private jet lease".

All of these are HUGE-spending markets...

...The customers who are in these markets are willing to buy, and they're able to spend a LOT of money...

But how many people do you think search for "platinum jewellery", or "private jet lease" online.

If you guessed not many - then you're smack-bang on the money!

As an example, when I had a look at the traffic stats for "private jet lease", I found fewer than 5 people searching for this per day!

With such little traffic, it could take months, or even years, for you to gather any valuable data on the success of your marketing - let alone make a profit!

You need to find a market that is "just right" - with good traffic levels, and good visitor values.